Miffed PH threatens Thailand as trade row over cigarettes heats up

The Department of Trade and Industry (DTI) might slap tariffs on vehicles imported from Thailand, an act of retaliation prompted by a longstanding trade dispute that involves one of the world’s largest cigarette makers.

The DTI said it would resort to this last measure in an effort to make Thailand drop its restrictive measures against cigarettes imported from the Philippines by threatening to hit the Southeast Asian country where it would hurt the most—its flourishing motor vehicles industry.

Motor vehicles are Thailand’s largest exports to the Philippines, according to the DTI, as Japanese auto giants such as Toyota and Mitsubishi have been producing their vehicles there. Because of a free trade agreement among Association of Southeast Asian nations, auto imports have been coming to the Philippines at zero tariff for years now.

The trade dispute between Thailand and the Philippines has been brewing for more than a decade, essentially because of how Thailand—which at the time had its own state-owned cigarette maker—has been unfairly treating imports from Philip Morris Philippines Manufacturing Inc. by making it more expensive, among others.

The World Trade Organization (WTO) has already ruled in favor of the Philippines on a number of occasions, but Thailand refused to accept these orders. This prompted the DTI to consider retaliating, a countermeasure which the WTO described as the “final and most serious consequence” a country could face for not implementing a dispute settlement.

“We will try to first convince Thailand, but that is our next move. If the issue still does not progress, we will be forced to do the retaliatory move,” Lopez told reporters on Wednesday on the sidelines of a rice trade forum.

Trade Undersecretary Ceferino Rodolfo said last week they planned to file this countermeasure at the WTO before the end of the year, noting that things could still change if Thailand budged.

The DTI is also currently considering a separate petition filed by a labor group to impose a safeguard duty against imported vehicles for allegedly hurting local jobs.

Nevertheless, Lopez refused to call the act of retaliation as the start of a trade war.

“The bottom line is: this does not necessarily mean it’s immediately a trade war,” Lopez said.